France and Germany have called on the European Commission to launch a sweeping simplification of EU financial services rules, arguing that regulatory complexity is weighing on banks, fintechs and Europe’s broader competitiveness. In a joint letter seen by Reuters, the two countries urged Brussels to review the entire framework of EU financial market legislation, signalling potential changes that could reshape the operating environment for financial institutions across the euro area.
The letter, sent to Financial Services Commissioner Maria Luis Albuquerque and dated Friday, proposes a comprehensive “Financial Services Simplification Package” aimed at making rules easier to navigate while preserving financial stability. German Finance Minister Lars Klingbeil and his French counterpart Roland Lescure argue that selective tweaks to future legislation are not enough. Instead, they want existing rules revisited and streamlined.
The timing is notable. Europe’s relatively weak growth has long concerned policymakers, and calls for deeper integration of the EU’s fragmented financial markets have struggled to gain traction. According to the letter, simplifying the rulebook could strengthen the single market for financial services and improve the global competitiveness of European institutions.
Reporting, Cyber Rules and Small Banks in Focus
Among the specific proposals, Berlin and Paris highlight the need to streamline reporting requirements so that a financial market transaction would only need to be reported once. They also call for simplifying cyber incident reporting obligations and repealing unused delegated powers.
The ministers question whether some existing disclosure requirements for smaller banks deliver tangible value. “Banking regulation requires small banks to disclose data, even though there are indications that this data is not used by anyone,” the letter states. The broader message is that regulation should be assessed against real-world outcomes and revised when it fails to deliver promised benefits.
The initiative comes as regulatory dynamics shift globally. In the United States, President Donald Trump is pushing regulators to reduce red tape, while UK authorities have also signalled a willingness to ease certain rules. German Finance Minister Klingbeil said ahead of a meeting of EU finance ministers that the bloc is at a turning point and should accelerate progress to strengthen its influence and sovereignty.
For fintech firms, the debate matters directly. Simplified reporting structures and more coherent rulebooks could reduce compliance costs, particularly for cross-border operators navigating multiple layers of EU legislation. At the same time, any recalibration must balance competitiveness with financial stability, especially as digital finance, cyber risks and cross-border payment flows become more complex.
The ministers say they are preparing additional input on banking regulation to share with the Commission in due course. Whether Brussels embraces a full-scale review remains to be seen, but the Franco-German push adds political weight to a growing debate over whether Europe’s regulatory model is fit for a more competitive and digitally driven financial landscape.
For the euro area’s fintech sector, the outcome could influence not only compliance burdens but also the pace at which innovation and investment can scale within the single market.